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Wednesday, May 18, 2011

Tax Carbon?

Hey there

Sorry I’m one day late posting this. Once again, I’ve been really busy at the hospital, but thanks so much for coming back. If this is your first time on this blog, welcome and I hope you find something interesting to read, if you like what you read, come back!

So exams are getting ridiculously close now. I received an email about 2 days ago saying my first paper will be on the 20th of June which is a bit over a month away. That means I have so much to study and do in such a short period of time. Lets hope I don’t fail the semester because I really really do not want to redo it.

Anyway, I was on SMH and I read an article saying Moody’s has downgraded the big 4 banks in Australia from Aa1 to Aa2, which comes as a surprise to me. I always thought that the big 4 were 4 of the safest banks in the world. Apparently, not so much. Only 14 banks in the world carry S&P’s AA grade or better and the big 4 are 4 out of that 14. And as we can expect, share prices of all four banks fell slightly after this announcement.

Another thing that has been coming up in the news quite a bit this past few days is the carbon tax. What do you think about putting a price on carbon?

So basically, companies have to pay to get a permit to produce greenhouse gases. If they produce less emissions, they are free to sell said permits, allowing them to make an additional profit if they are friendlier to the environment. I think it is a very good idea to encourage green technologies and it is most probably beneficial to the environment as well. My worry is that if companies are forced to pay a tax on their emissions, how will consumers be affected? We all know companies are out to make a profit. If they have to pay this additional cost, wont they have to charge us more, as consumers, to make that profit?

I think another thing this carbon tax does is that it turns pollution into a commodity. Much like buying and selling other commodities, investment banks can buy and sell the right to produce greenhouse gasses and make a profit there as well.

I’m definitely no expert in this but what do you think about putting a price on carbon? Are you for or against it? And why? Do drop me comments or emails, I’m more than happy to read them.